Students Seek Some Reality Amid the Math Of Economics

By MICHAEL M. WEINSTEIN

Published: September 18, 1999

On my first day as a graduate student in economics at the Massachusetts Institute of Technology, the professor introduced the discipline by intoning, ''All of economics is a subset of the theory of separating hyperplanes.'' (You don't want to know what that mathematical term means.)

I started to giggle. But then I looked around. Everyone else was scribbling notes. So I wiped the smirk off my face and muttered, only to myself, that I had thought economics was about the plight of people living in sub-Saharan Africa or the impact of technological change on living standards. Apparently I thought wrong -- and wondered whether I had made a terrible career choice.

Decades later, I find economics graduate students asking themselves the same question: where is the economic substance in graduate economics programs? I recently joined several dozen first- and second-year students at a conference in Airlie, Va., that was convened to help them find their way toward applied economics -- analyzing problems that real people face. During the weeklong conference, organized by the Social Science Research Council and paid for by the John D. and Catherine T. McArthur Foundation, eminent scholars presented lectures on applied topics ranging from the plight of low-income mothers under the 1996 welfare law to the long-term determinants of innovation.

To noneconomists, these lectures would no doubt appear heavily theoretical, laced with mathematical and statistical derivations. But at least since the writings of Paul Samuelson, Nobel laureate from M.I.T., in the 1940's, economists have used large doses of mathematics to create insight and clarity.

The difference at Airlie was that the object of the lectures was to improve understanding of the relationships among people rather than among mathematical symbols. After the lectures students met in small groups to pose follow-up questions and design research strategies. The idea was to motivate them to do applied work and give them a head start in developing an applied focus for their Ph.D. theses.

David Weiman, the former director of the council's program and now at the Russell Sage Foundation, hopes that the summer conference and research grants that the council provides can offset what he sees as a lamentable tendency among young graduate students. Too often, he says, they allow mathematical technique to dictate the questions they ask rather than first seizing a pressing social question from which the choice of appropriate technique would then follow. Graduate programs, he says, ''emphasize teaching students how to prove theorems, misleading them into thinking that economics is a deductive exercise, the mere application of mathematical logic.''

Prof. Alan Blinder of Princeton University considers it damning to some of the country's most prestigious graduate programs that their students need to flock to summer camp to find an outlet for their interest in applied work. Mr. Blinder, a former member of President Clinton's Council of Economic Advisers and a driving force behind the council's efforts to promote applied economics, said in a recent interview that too much of what young scholars write these days is ''theoretical drivel, mathematically elegant but not about anything real.'' He attributes the problem in part to the first year of training, or what he calls mathematics boot camp, during which students are handed a steady diet of theory but not taught to connect it to the real world. They soon forget the issues that attracted them to economics.

Mr. Blinder makes an important distinction. He remains scrupulously agnostic over whether graduate training is overly theoretical. ''That's a tough issue.'' But he is unwavering when he criticizes the training as ''increasingly aloof and self-referential.''

Indeed, the students at Airlie seemed surprisingly unfamiliar with many current economic issues. Chatting at lunch with a half-dozen of so of the graduate students, one of the guest lecturers referred to the earned-income tax credit as the E.I.T.C., the country's most successful anti-poverty program next to Social Security. ''What's that,'' one student asked. Nor could many of the students distinguish Medicare from Medicaid or demonstrate familiarity with simple facts about the American economy. They had studied the theory of financial markets, but not its connection to the crisis sweeping through Asia.

Many of these students admitted that they do not read newspapers. Nor do many see much of a connection between knowledge of economic reality or Government policies and their chosen course of study.

Gary Burtless of the Brookings Institution lectured the group about the economic factors that determine when people decide to retire. I joined a half-dozen students in their follow-up session. The students were asked what interesting questions Mr. Burtless's lecture provoked. After a slightly awkward silence, one student launched into the speculation that the group could develop a ''two-sector general equilibrium model'' that could be tweaked in this or that direction. When the students were asked again to pose questions, not design models, the conversation drifted once more toward mathematical modeling.